US Retailer Macy's Fails to Step on the New Retail Train, Exits China
Xu Wei
/SOURCE : Yicai
US Retailer Macy's Fails to Step on the New Retail Train, Exits China

(Yicai Global) June 6 -- US department store Macy's will close its Chinese online shop from June 9, as the Ohio-based retailer follows Marks & Spencer and ASOS and opts out of China's retail market due to poor sales in the increasingly thick complexity of online and offline consumer demands.

Macy's website will close but customers can still continue buying goods on the firm's Tmall e-commerce store which will deliver products from the US, the department store operator said in a statement to news outlet Beijing Business Today.

The main reason Macy's unsatisfying development in China is the poor timing, said Victor Guo, president of China Shopping Center Development Association of Mall China. China's e-commerce business is developing very rapidly, it is difficult to retain customers by relying on the online platform alone.

In this regard, foreign brands may fall short because rivaling Chinese retailers are offering a comprehensive portfolio of online and offline services, billed by Alibaba Executive Chairman Jack Ma as New Retail, which combines online shopping with in-store experiences and delivery options.

Chinese consumers also have a relatively high degree of recognition of foreign brands because they usually travel and shop abroad, Guo said, adding that foreign retailers often go overboard with excessive localization that causes the projects to fail to convey the novelty that consumers expect from such brands.

Macy's bought into luxury e-commerce platform Jiapin, operated by Beijing Xinghe Fashion Technology, for USD15 million in 2012, but the firm went bankrupt. After opening a store on Tmall in 2015 and opening its own online shop in 2017, China sales joined the retailer's other weak overseas profit results. Macy's closed 68 stores and laid off over 10,000 employees overall last year.

If Macy's or other foreign department stores want to re-enter the Chinese market in the future, they can cooperate with the country's already existing stores through procurement channels, Guo added.

Other foreign companies have also suffered setbacks in the Chinese market. UK department store Marks & Spencer sold all its retail business in Hong Kong and Macau and formally withdrew from the Chinese market early this year. Another UK brand, online fashion retailer ASOS lost a total of EUR8.6 million in 2016 in China, and it subsequently opted out of the market.

French retailer Galeries Lafayette made a quick foray into Beijing's retail market, after which it stayed away for 15 years, until a flashy return in 2013, saying that the Chinese market has changed dramatically over the last decade, including the emergence of a middle class which is keen to acquire fashion brands. The firm is now planning another brick-and-mortar unit in Shanghai by the end of this year.

Editor: Emmi Laine

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Keywords: US , Macy's , Department Store , Marks & Spencer , ASOS , Retail , Tmall , E-COMMERCE